Payments consultant Bradford Kelly
Payments experts and small business groups have delivered mixed responses to the findings of the Reserve Bank’s retail payments review, characterising some of the proposed reforms as potentially inconsistent or “too modest”.
Mark McKenzie, the chair of COSBOA - the country’s peak small business body – panned the RBA for not proposing reforms that would require banks to improve the transparency of fees collected from retailers and other merchants.
Even though the RBA found that so-called “scheme fees” passed on to retailers by banks were opaque, the regulator baulked at introducing reforms to improve disclosure.
“We’re very disappointed about the meagre nature of the reforms canvassed in the RBA’s consultation paper,” McKenzie said.
“It amounts to an abrogation of the RBA’s responsibility to deliver pricing transparency in relation to the merchant fees that banks impose on all small businesses.”
Sydney-based payments consultant Bradford Kelly believes the RBA’s consultation paper signals it plans to make no meaningful reforms to the payments system.
He is critical of the regulator’s decision to allow buy now pay later providers to continue preventing merchants from surcharging customers for accepting payment through services such as Afterpay and Zip.
BNPL providers charge merchants at least 4 per cent of the value of purchases made through their platforms.
“The RBA made surcharging a big issue for card schemes twenty years ago,” he said.
“Today a retailer can surcharge for the cheapest payment method but not the most expensive.”
Kelly characterised the reform agenda flowing from the review as a “nothing burger”.
“If the RBA was a fast food joint this report would be the menu item called ‘nothing burger’,” he said.
Grant Halverson, the principal of Melbourne-based payments consultancy McLean Roche, said he was puzzled by many of the preliminary findings of the review.
He said the findings published in the consultation paper might indicate that the Morrison Government had a hand in shaping the RBA’s reform agenda.
“The paper looks to have the fingerprints of the government all over it,” he said.
“The RBA might have formed a view that the current political environment would not be supportive of any meaningful reforms.”
Halverson said the lack of meaningful regulatory action on least cost routing was cause for concern.
“The RBA does not see a need to regulate to increase provision of least cost routing for high-street transactions or online,” he said.
“This is a totally baffling decision because without regulation payment providers will continue to drag their feet with least cost routing rollouts.”
Halverson also believes the lowering of the interchange cap on single network debit cards will do little to discourage non-major banks from dropping eftpos functionality on debit products.
Michael Swannell, the managing director of Brisbane-based KeyOne Consulting indicated he had some concerns about the RBA’s proposal to allow only non-major banks to issue single-network debit cards.
“The RBA has a strong preference for multi-network debit cards,” he said.
“My view is that the market should be allowed to speak.
“If there is a principle to preserve then so be it, but why are some providers allowed to issue single-network debit cards and others aren’t?”